We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Retain DOW Stock in Your Portfolio
Read MoreHide Full Article
Dow Inc. (DOW - Free Report) is expected to benefit from cost and productivity actions and investment in high-return projects amid headwinds from weak demand due to soft global economic activities.
DOW’s shares are up 3.6% over a year, compared with 3% rise of its industry.
Image Source: Zacks Investment Research
Let’s find out why DOW stock is worth retaining at the moment.
Cost Actions & High-Return Growth Projects Aid DOW
Dow focuses on maintaining cost and operational discipline. DOW is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Its targeted actions delivered $1 billion in cost savings for full-year 2023.
Dow also remains focused on investing in attractive areas through highly accretive projects. It is investing in several high-return growth projects including the expansion of downstream silicones capacity. Its disciplined and balanced capital allocation priorities are also supporting its Decarbonize and Grow strategy to deliver long-term value creation for its shareholders. It is advancing its Decarbonize and Grow and Transform the Waste strategies, which are expected to deliver more than $3 billion in underlying earnings annually by 2030.
The company received a definitive green light from its Board in November 2023 for its Fort Saskatchewan Path2Zero initiative, marking a significant milestone in its commitment to building the world's inaugural net-zero Scope 1 and 2 emissions-integrated ethylene cracker and derivatives facility in Alberta, Canada.
The project involves the construction of a new ethylene cracker, a 2-million MTA polyethylene capacity expansion and retrofitting the existing cracker to achieve net-zero Scope 1 and 2 emissions. It is expected to generate $1 billion in EBITDA growth annually throughout the economic cycle and decarbonize 20% of Dow's global ethylene capacity. The investment positions DOW to meet increasing demand in lucrative markets such as packaging, infrastructure and hygiene, with additional potential gains from the commercialization of low and zero-emission products.
The company is also committed to returning value to its shareholders by leveraging healthy cash flows. It returned $2.6 billion to its shareholders in 2023 through dividends and share buybacks. Dow also returned $693 million to shareholders in the first quarter of 2024 and $691 million in the second quarter through dividends and share buybacks. It has adequate liquidity of roughly $13 billion and no substantial debt maturities until 2027.
Demand Weakness, Turnarounds Pose Headwinds for DOW Stock
DOW faces challenges from demand softness in Europe and Asia. Lower consumer spending amid inflationary pressures is affecting demand in Europe. Global industrial activities have been affected by the weaker demand recovery in China. The property sector remains sluggish in China with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure including residential construction remains weak. Soft conditions across these markets are likely to impact volumes in third-quarter 2024. Demand is expected to remain pressured by elevated inflation, high interest rates and geopolitical tensions over the near term, notably in building and construction and durable goods markets. DOW does not expect a significant change in demand in building & construction and consumer durables in 2024.
The company also faces headwinds from plant turnaround costs. DOW, on its second-quarter call, noted that it sees a $25 million headwind from higher planned maintenance activities in the third quarter in the U.S. Gulf Coast, impacting the Industrial Intermediates & Infrastructure segment. Also, a turnaround at its St. Charles, LA, cracker is expected to impact the Packaging & Specialty Plastics segment.
DOW recently updated its third-quarter 2024 earnings guidance, forecasting revenues of approximately $10.6 billion and operating EBITDA of about $1.3 billion. Dow stated that its revised outlook is mainly prompted by a major unexpected incident in late July at one of its ethylene crackers in Texas.
The Zacks Consensus Estimate for IAMGOLD’s current-year earnings has increased by 46.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 200%. Its shares have shot up roughly 166% in the past year.
The consensus estimate for Eldorado Gold’s current year earnings is pegged at $1.40 per share, indicating a year-over-year rise of 145.6%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 103% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal-year earnings is pegged at $4.14, indicating a rise of 15.3% from year-ago levels. The Zacks Consensus Estimate for HWKN’s current fiscal-year earnings has increased 12.8% in the past 60 days. The stock has rallied around 101% in the past year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why You Should Retain DOW Stock in Your Portfolio
Dow Inc. (DOW - Free Report) is expected to benefit from cost and productivity actions and investment in high-return projects amid headwinds from weak demand due to soft global economic activities.
DOW’s shares are up 3.6% over a year, compared with 3% rise of its industry.
Let’s find out why DOW stock is worth retaining at the moment.
Cost Actions & High-Return Growth Projects Aid DOW
Dow focuses on maintaining cost and operational discipline. DOW is implementing targeted actions focused on optimizing labor and purchased service costs, lowering turnaround spending and boosting productivity. Its targeted actions delivered $1 billion in cost savings for full-year 2023.
Dow also remains focused on investing in attractive areas through highly accretive projects. It is investing in several high-return growth projects including the expansion of downstream silicones capacity. Its disciplined and balanced capital allocation priorities are also supporting its Decarbonize and Grow strategy to deliver long-term value creation for its shareholders. It is advancing its Decarbonize and Grow and Transform the Waste strategies, which are expected to deliver more than $3 billion in underlying earnings annually by 2030.
The company received a definitive green light from its Board in November 2023 for its Fort Saskatchewan Path2Zero initiative, marking a significant milestone in its commitment to building the world's inaugural net-zero Scope 1 and 2 emissions-integrated ethylene cracker and derivatives facility in Alberta, Canada.
The project involves the construction of a new ethylene cracker, a 2-million MTA polyethylene capacity expansion and retrofitting the existing cracker to achieve net-zero Scope 1 and 2 emissions. It is expected to generate $1 billion in EBITDA growth annually throughout the economic cycle and decarbonize 20% of Dow's global ethylene capacity. The investment positions DOW to meet increasing demand in lucrative markets such as packaging, infrastructure and hygiene, with additional potential gains from the commercialization of low and zero-emission products.
The company is also committed to returning value to its shareholders by leveraging healthy cash flows. It returned $2.6 billion to its shareholders in 2023 through dividends and share buybacks. Dow also returned $693 million to shareholders in the first quarter of 2024 and $691 million in the second quarter through dividends and share buybacks. It has adequate liquidity of roughly $13 billion and no substantial debt maturities until 2027.
Demand Weakness, Turnarounds Pose Headwinds for DOW Stock
DOW faces challenges from demand softness in Europe and Asia. Lower consumer spending amid inflationary pressures is affecting demand in Europe. Global industrial activities have been affected by the weaker demand recovery in China. The property sector remains sluggish in China with declining new home prices.
Inflationary pressures are impacting consumer durables and building and construction demand. Demand in infrastructure including residential construction remains weak. Soft conditions across these markets are likely to impact volumes in third-quarter 2024. Demand is expected to remain pressured by elevated inflation, high interest rates and geopolitical tensions over the near term, notably in building and construction and durable goods markets. DOW does not expect a significant change in demand in building & construction and consumer durables in 2024.
The company also faces headwinds from plant turnaround costs. DOW, on its second-quarter call, noted that it sees a $25 million headwind from higher planned maintenance activities in the third quarter in the U.S. Gulf Coast, impacting the Industrial Intermediates & Infrastructure segment. Also, a turnaround at its St. Charles, LA, cracker is expected to impact the Packaging & Specialty Plastics segment.
DOW recently updated its third-quarter 2024 earnings guidance, forecasting revenues of approximately $10.6 billion and operating EBITDA of about $1.3 billion. Dow stated that its revised outlook is mainly prompted by a major unexpected incident in late July at one of its ethylene crackers in Texas.
Dow Inc. Price and Consensus
Dow Inc. price-consensus-chart | Dow Inc. Quote
DOW’s Zacks Rank & Key Picks
DOW currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space are IAMGOLD Corporation (IAG - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Hawkins, Inc. (HWKN - Free Report) . While IAMGOLD and Eldorado Gold sport a Zacks Rank #1 (Strong Buy), Hawkins carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for IAMGOLD’s current-year earnings has increased by 46.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 200%. Its shares have shot up roughly 166% in the past year.
The consensus estimate for Eldorado Gold’s current year earnings is pegged at $1.40 per share, indicating a year-over-year rise of 145.6%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 103% in the past year.
The Zacks Consensus Estimate for Hawkins’ current fiscal-year earnings is pegged at $4.14, indicating a rise of 15.3% from year-ago levels. The Zacks Consensus Estimate for HWKN’s current fiscal-year earnings has increased 12.8% in the past 60 days. The stock has rallied around 101% in the past year.